ZEE Q3FY19 revenues up 17.9% on back of strong broadcast business

Zee Entertainment Enterprises Limited (ZEEL) has reported consolidated revenue of Rs 21,668 million for the third quarter ended December 31, 2018, a growth of 17.9 per cent on YoY basis. The growth was driven by the strong performance of the group’s broadcast business. EBITDA (Earnings Before Interest, Tax, Depreciation and Amortization) for the quarter grew by 26.9 per cent to Rs 7,543 million, translating into EBITDA margin of 34.8 per cent. Profit After Tax (PAT) for the quarter stood at Rs 5,624 million.

During the quarter, ZEEL’s consolidated advertising revenue grew by 21.7 per cent YoY to Rs 14,626 million. The 20.6 per cent growth in domestic advertising revenue to Rs 13,719 million, on a strong base, was driven by the continued strong performance of the group’s television business and aided by the emerging digital business. The advertising demand continues to be strong across categories, reflecting positively on the advertising growth outlook. International advertising revenue grew by 40.2 per cent growth due to stronger traction in Europe, US and APAC region.

During the quarter, ZEEL’s consolidated subscription revenue grew by 23.3 per cent YoY to Rs 6,185 million. Domestic subscription revenue for the quarter increased by 28.6 per cent YoY to Rs 5,192 million. The higher-than-normal domestic subscription revenue growth was on a low base and driven by monetisation of Phase-III subscribers. As the implementation of TRAI’s tariff order draws near, ZEEL is actively engaging with all its distribution partners to enable a smooth transition to the new system. The groups believed that the regulation will go a long way in empowering the consumer and improving transparency in the distribution value chain.

International business

During the quarter, ZEEL’s international business revenue stood at Rs 1,978 million. The advertising revenue grew by 40.2 per cent, while the subscription revenue grew by 1.2 per cent. Break-down of international business revenues for the first quarter is as below:

Advertisement Revenue of Rs 907 million

Subscription Revenue of Rs 993 million

Other Sales and Services of Rs 78 million

ZEE5 records strong growth

ZEE5 continues its strong growth, recording 56.3 million MAUs in December 2018, a growth of 36 per cent over the last 3 months. The ZEE5 app crossed 50 million gross downloads on Android Play store. ZEE5 users currently spend an average of 31 minutes per day on the platform.

During the quarter, ZEE5 entered into partnerships with several key players in the digital eco-system to make its content accessible to more consumers. As part of the deal with Airtel, selective ZEE5 content is available to premium Airtel subscribers (ARPU of Rs 199 and above) on Airtel TV app. ZEE5 is in active discussions with other telecom operators to make its content available to their consumers as well.

In Q3FY19, ZEE5 partnered with leading e-wallet company, Paytm, to provide 50 per cent cashback to subscribers on monthly, half-yearly and annual packs. It also entered into partnerships with India’s two leading travel and hospitality companies – MakeMyTrip and OYO Rooms, which provide exclusive benefits to both their and ZEE5’s customers. Continuing with its endeavour to increase availability across devices, ZEE5 is now also available on all Xiaomi, Samsung and LG smart TVs.

Expenditure

ZEEL’s total expenditure in Q3FY19 stood at Rs 14,125 million, higher by 13.6 per cent YoY, compared to Q3FY18. Programming cost for the quarter increased by 18.5 per cent YoY to Rs 7,978 million. This increase was driven by content cost for ZEE5 and elevated movie amortization costs for the broadcast business. Advertising, publicity and other expenses for the quarter grew 3.4 per cent YoY to Rs 4,313 million despite a higher base due to increase in marketing and promotion costs associated with ZEE5, new channel launches and brand refresh campaign of two channels during the quarter.

Subhash Chandra, Chairman, ZEEL, commented, “We have delivered yet another quarter of strong performance across all our businesses. ZEE5 is scaling up in line with our expectations and is on course to become India’s number one digital entertainment platform.” He further observed, “India is poised to remain one of the fastest growing economies in the world. Decline in crude oil prices and rationalization of GST rates will further boost the economy and help maintain the growth momentum in consumption. Even in M&E space, content consumption is growing at a brisk pace across mediums. This trend, along with macroeconomic tailwinds, will drive growth in both advertising and subscription revenues.”

Pleased with ZEEL’s performance in Q3FY19, Punit Goenka, Managing Director & CEO, ZEEL, remarked, “This further strengthens our position as India’s leading entertainment content company. While our television business continues to consolidate its No. 1 position, ZEE5 is quickly establishing itself as one of the leading digital entertainment platforms in the country. ZEE5 has already become the biggest producer of Indian content amongst the digital platforms and the content offering will multiply going forward. Our expanding list of partnerships with telecom operators and players in the digital eco-system, coupled with innovation in pricing, will make ZEE5 accessible to a wider audience.”

“With the launch of our Malayalam channel, Zee Keralam, ZEEL now has the widest footprint in country in terms of the languages covered. It will help us further consolidate our network share. Advertising outlook for the industry looks upbeat and we aim to outpace the industry growth on the back of our growing network share. After much delay, TRAI’s tariff order is now set to be implemented across the country next month. I reiterate that this is a positive step for the industry in the long term and will be beneficial for everyone. While it will take some time for the new system to settle, we are working with all our partners for its smooth implementation,” Goenka added.